NIESR upgrades UK economy but warns on consumer spending

A respected think tank has raised its UK growth forecasts for this year and next but warned any recovery is dependent on consumer spending.

The National Institute for Economic and Social Research (NIESR) said the UK would grow by 1.2% this year and by 1.8% in 2014. This is an increase of 0.3% in both years on its outlook from three months ago. It said this was driven by a "rise in the prospectus for consumer spending growth… at the expense of household saving." The report said households have cut their savings rate from 6.7% last year to 4.2% already and NIESR expects that to fall to 3% soon. Spending has therefore picked up, boosting the economy. However, NIESR warned growth next year could collapse back to 1% if ...